What Are Fee-Splitting Agreements?

Wrongful Death Lawyer

Attorneys may use fee-splitting agreements when they meet with a client, then for one reason or another, believe the client will be served better by another attorney at a different law firm, but they do not want to lose out on the money the case could bring in. The attorney first intaking the case will negotiate the fee split with the attorney they refer the case to. The client can decline representation by the attorney they are referred to and they will approve or deny the fee split allocation. The client always has the last say and must sign off on the fee-splitting agreement. 

In most jurisdictions, attorneys from different firms may split fees if they assume joint responsibility for the case. There is no requirement that the referring attorney works on the case as long as they are willing to take responsibility for it. This makes fee-splitting agreements different from a referral where the attorney can walk away without any responsibility for the case. Here, the referring attorney is on the hook if co-counsel botched the case. If the case is strictly a referral, many states will not allow a “referral fee” because the attorney is not responsible for the case anymore. Each state bar will have its own rules that the legal community must follow for fee-splitting agreements.

For example, in Nevada, fee-splitting agreements are governed by Nevada Rule of Professional Conduct 1.5(e). The rule states, “a division of fee between lawyers who are not in the same firm may be made only if: (1) reserved; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable.” 

What Are the Benefits of a Fee-Splitting Agreement? 

Entering into fee-splitting agreements with other firms can benefit your firm and your practice. The attorney who intakes the case may often not have the resources or experience to see the case through. Providing attorneys with the ability to send a case to another attorney outside of their firm without losing out on the entire fee helps ensure the right cases are going to the right firms. Rule 1.1 of the Rules of Professional Conduct, which are the governing rules for lawyers created by the American Bar Association, states that “a lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” 

There is a significant benefit to the referring attorney because they will not have to sink their own money into the case while still reaping the benefits if the case settles or reaches a verdict in the client’s favor. Using this strategy allows firms to concentrate on their area of expertise while not losing out on a great case. Fee splitting agreements are and should be a common practice in the legal profession across the United States. Make sure to research your own state’s rules of professional conduct to make sure you are following the rules when entering into these agreements. 

If you have questions about a case, contact a wrongful death lawyer, like one at The Law Office of Eglet Adams for information about your situation.